Norman Lamont - the man who invented PFI - always intended that PFI would be used to attract private investment into projects that would be additional to public provision. He said in 2002 that the Government appeared to be using PFI as a means of keeping public expenditure off the balance sheet, which they carried on doing until they left office.

PFI debt is not treated as public borrowing for accounting purposes and therefore doesn’t contribute to the PSBR [Public Sector Borrowing Requirement]. This piece of trickery meant that Brown could say he was maintaining “fiscal discipline” whilst running up vast amounts of expensive PFI debt to build schools and hospitals. He couldn't have done this if he'd borrowed more cheaply by conventional means. i.e. issuing government gilts or bonds.

The absurdity is that Labour were maintaining - and Brown built his reputation as Chancellor - on the illusion of being 'financially prudent'. In reality they were just using the most expensive financing option available to build all those shiny new hospitals and schools during 13 years in government.

The UK’s new Chancellor has taken steps to bring over £200bn in PFI liabilities onto the government’s balance sheet.

True to his campaign pledge of bringing more transparency to the UK’s private finance initiative (PFI) programme, new Chancellor George Osborne has already taken steps to bring over £200 billion (€232 billion; $286 billion) in PFI liabilities back onto the public balance sheet.

Under the Chancellor’s newly-created Office for Budgetary Responsibility – which will be responsible for providing the government with the official forecasts on which its future budgets will be based – “the costs of ageing, public service pensions and private finance initiative contracts” will be factored in the public accounts. Previously, PFI liabilities could be recorded off-balance sheet.

PFI is the UK’s standardised procurement process that tenders public works to the private sector. It was started in 1992 by the last Conservative government but was mostly used under Tony Blair’s Labour government from 1997. Since 1992, about 630 schemes have been procured through it, covering an investment of £63 billion and leaving taxpayers to pay an estimated £217 billion in user charges between now and 2033, law firm Norton Rose wrote in a pre-election briefing.

The move, continues Norton Rose, is likely to “require a Conservative government to make even more difficult decisions in terms of future public spending.” It may also signal the beginning of the Chancellor’s previously stated intention to reform PFI, which he thought had become “totally discredited” under the previous Labour government.

While the new government has yet to announce its plans for PFI, if previous statements provide any guidance Osborne will put PFI’s emphasis on value for money and full risk transferral, making sure taxpayers will not be locked into poorly performing contracts.

Regarding the former, the Conservatives had said that PFI would no longer be considered the default procurement method, with future projects having to demonstrate that they would be cheaper under private sector procurement, or else would be paid from the government’s balance sheet.

However, Norton Rose highlighted that the Conservatives did not specify how they aimed to make sure that taxpayers would not be locked into poorly performing contracts. “To the extent that the Conservatives seek to alter this, there would presumably be an impact on the private sector’s pricing assumptions at the bidding stage,” the law firm said.

On a more positive note for PFI, the House of Lords Economic Affairs Committee’s recent investigation into the scheme is revealing that the majority of projects “run on a PFI basis are overwhelmingly finished on time, on budget and on specification. By contrast, the European Investment Bank submitted that over half the projects monitored that had used traditional procurement had delays of at least a year,” Norton Rose wrote in the briefing.

No, I am the one who opened a thread highlighting the inequality of spending in London compared to the rest of the country.

The UK's population is unevenly spread. It's hardly news that the spending is, therefore, equally uneven. (Also, HS2. Or are Birmingham, Edinburgh, Manchester and Glasgow part of London too, now?)

The greatest problem facing the UK's infrastructure is the staggering cost of doing anything in the country. As I've pointed out elsewhere, HS2 is projected to cost more than building a bunch of record-breaking tunnels under the bloody Alps! THAT is the scandal. THAT is what the UK should be addressing as a matter of urgency. The cost inflation in the country is simply insane.

(Another example is the loss of Surrey Canal Road station on Phase 2 of the ELL Extension. This was projected at over 10 million pounds! For a simple, two-platform station on a disused railway formation! Seriously, What. The. HELL?)

stirmaco - no the people is that all the decision makers and influencial people live in London and no where else and as such only represent that part of the country.
The huge difference in spending per head on transport in London compared to the rest of the country IS a major issue in the rest of the country yet it is NEVER on Newsnight, Panorama or and national news program that comes from London. Why is that?

Because the London based media don't see what matters to the rest of the country so simple don't report iit.

The article you posted and indeed the title of this thread is about an alleged £1 billion waste of resources which has naff all to do with the issues of North vs South expenditure on infrastructure. If you link to an article you should be able to debate the issues as to which it relates, not just twist a subject yet again to suit your own agenda. So I highlighted some of the problems of PFI under Labour - which has been a real issue in terms of cost inflation for capital projects - yet get labelled a Tory spokesman with no mind of my own?

You keep whittling on about the North South divide if it makes you feel better but its been done to death recently on SCC, especially with the reappearance of the yet another banned poster who rather like yourself Metrolink, is completely obsessed with the idea.

Though since the government brought them in slowly from 1992-1997 the chance for things to go wrong hadnt occured yet, by the time Labour took office the Conservatives had signed £68bn of PFI investment deals at a cost to the taxpayer of £215bn. When labour left office the cost to the Taxpayer for future payments was £267bn. So in 13 years of profligate Labour the liability only increased by £52bn.

I must admit its interesting to scroll through and see how much total capital has been invested in each region under PFI schemes over the years.

Wales £1bn
North East £2bn
East Midlands £2.4bn
Yorkshire and Humber £2.7bn
The East £2.8bn
South West £3.5bn
West Midlands £3.8bn
North West £4.6bn
Scotland £6.3bn
South East £7.5bn
London £29bn

Total Capital invested £65bn
*note only includes completed projects not ones cancelled or abandoned after signing

Though since the government brought them in slowly from 1992-1997 the chance for things to go wrong hadnt occured yet, by the time Labour took office the Conservatives had signed £68bn of PFI investment deals at a cost to the taxpayer of £215bn. When labour left office the cost to the Taxpayer for future payments was £267bn. So in 13 years of profligate Labour the liability only increased by £52bn.

No that's not true.

By October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn. So Gordon Brown alone during his tenure as PM managed to add another £52bn of liability onto the £215bn.

Check out the “PFI Signed Projects List” link below which documents all 668 of the PFI deals, you'll see very few were signed before 1997.

Yes, but you need to look at the value of them, all the deals signed under the Conservatives bar 2 where national projects with huge value and those 2 were in the South East and South West, most of those under Labour have been small local schemes with values as small as £5m. you can also look at the figures in that report and 4x the number of PFI deals were signed in 2006/7 in Conservative or Liberal Councils (coefficent 1.28 and 1.25 where 1 is a avg of a deal signed per council) than in Labour (0.27) or Noc (0.00), the figures do show however a deal was almost twice as likely to be signed in a Metropolitan council than a london council or county council.

That spreadsheet you provided is only a list of projects still being paid off as of financial year 2009/10, 668 projects on the books or closing by end of that year, the total PPP deals that have ever been done since 1992 is actually 920! Nearly a 1/3rd of PPP deals have been fully repaid, naturally the earlier ones have been repaid the most.